Fairbanks housing market holds steady
Published Sunday, July 20, 2008
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Stumble It!FAIRBANKS — Home sales around Fairbanks stuck close to normal this spring, according to numbers reported Wednesday by the Greater Fairbanks Board of Realtors.
Home buyers purchased about as many new and existing homes in most size categories — excluding big homes with five or more bedrooms — as they did in the springs of 2006 and 2007 and more than years before that, the board reported Wednesday.
“For the numbers being as good as they are despite (tighter lending standards) is encouraging,” Amy Krier, president of the Realtors’ board, told reporters at a news conference Wednesday.
“What I find particularly encouraging is we’re seeing our typical seasonal surge of activity,” she said.
The average sale price for the second quarter of this year was $220,692. That was only slightly lower than last spring, although Krier acknowledged Wednesday afternoon that home sellers are making more concessions that, if they are covering increasing portions of buyers’ closing costs, are not reflected in reported sales prices.
Wednesday’s numbers reveal a local housing market that is somewhat saturated compared to recent years, with more homes listed for sale right now — a seven-month supply, as calculated by the board — than this time last year or the year before. Still, that’s a decline from a 10-month supply reported three months ago. While foreclosure numbers in Fairbanks and across Alaska are up slightly, and lending standards are tighter than a couple of years ago, Krier and a housing specialist from the Alaska Housing Finance Corp. maintain Fairbanks is doing better than most places in the country.
Krier acknowledged prospective buyers remain worried about skyrocketing home heating costs. She noted the number of large, five-plus-bedroom homes reported sold this spring is less than half of last spring. But she said buyers seem to be adapting by asking for more information about sellers’ past energy bills.
Karen Bussa, who with her husband has been shopping for a home for two years, said they’ve increasingly considered energy efficiency as their search moved forward. But she said the worry was somewhat tempered by a decline in prices — she said the asking prices for around one-half of the 60 homes she tracked through this summer fell at least marginally, which helped make home ownership in Fairbanks seem more affordable.
“It felt unattainable when we started looking,” Bussa said by phone Wednesday. Now, she said, “we are nervous, but we feel like we can manage.”
Public officials at the national level say the United States housing market continues to contract. Local leaders in Fairbanks have shown even more worry about the rising prices of gasoline, heating fuel, food and natural gas, increases that have led them to fret publicly about the economy in Fairbanks.
But the number of mortgage-default notices — issued by lenders to property owners with late mortgage payments — and foreclosure sales in Fairbanks and across the state went up only slightly in 2007 and early 2008, according to figures from the Alaska Housing Finance Corp.
James Wiedle, an analyst with AHFC, said default notices — which precede, but do not always result in, foreclosures — were at a 10-year high last year but were just a fraction of the level seen during the 1980s economic bust in Alaska. Lenders have sent out more default notices early in 2008 than the same time a couple of years ago, but the increase was relatively small, he said.
“I don’t think this is unusual given our current circumstances with respect to food costs, fuel prices, etc.,” he wrote in an e-mail to the Daily News-Miner on Tuesday. There are 280,000 housing units in the state, the vast majority of which have healthy mortgages, he said.
Krier said real estate agents in Fairbanks are informing buyers about weatherization programs and rebates, such as refunds offered by the Alaska Housing Finance Corp. on new homes built to meet tough energy-efficiency standards.
“There’s huge amounts of money available to people who want to make their homes more energy efficient,” she said.
Community Discussion
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What no one wants us to know: IS HOW MANY MORE HOMES ARE FOR SALE NOW COMPARED TO PAST YEARS?? That's the number that is meaningful not how many were sold.
I would suspect the Fairbanks housing market remains overpriced and our local bubble has yet to correct. A safe mortgage should not be more than 3 times a person's gross income. Given that rule of thumb, you should not buy the average $220,692 Fairbanks home unless household income exceeds 73K/year.
Of course, I'm sure Alaska Housing Finance Corp and the local realtors would strongly disagree.
I am glad to see this kind of story. Still, there are ways we could decrease the cost of housing. The oil market does not serve individual Alaskans. It benefits the producers and the state at the expense of the people. Alaska should sell royalty oil and refined products to residents at below-market prices. The market is no longer tied to the cost of production, so the only cost is a reduction of the excessive profits. It would have a ripple effect through the whole economy by reducing the cost of groceries and building materials and everything else that must be transported.
Every buyer out there needs to pay at least 20% less than the asking price for a home. It's your duty as a citizen! Help us out a little here and get those assessments down!
The single most important factor in determining what home you can afford right now in the Fairbanks area is how much does it cost to heat it and keep the lights on. In a home that the mortgage will be $1500 and the past heating and electric bills might have averaged say $400 a month, now has amonthly average of $800-$1000 a month during winter. So folks have to bring those numbers together and find out what they can really afford. With the current ridiculous price of electric and heating oil, most folks are placed in a position where they can only afford a much cheaper house if they are going to be able to afford to pay the mortagage and the utility bills. I know my utility bills have literally doubled, and I never had a $170 electric bill during summer before, but we can all thank GVEA for that one, and I fear to see what my electric bill will be come winter when the furnace is running and the lights are actually on. Pretty incredible and quite sad when your utility bills are 1/3-1/2 the cost of your mortgage. Name me another place in our nation that has those numbers?? The first poster brought up a very good point, these sales numbers dont mean squat...we all know that we have never had a 1" thick classiified section solely for real estate, there isn't a road in North Pole or Fairbanks that doesn't have at least a few houses for sale signs on it and some have many more.
They use to say you needed about three months worth of saved income to make it through a emergency such as job loss, now they are saying a year's worth of income.
This winter may be the stone that breaks the camels back, the cost of heating may just be too much for people.
When I sold real estate we always counseled people that they needed to make sure their housing costs did not exceed 35% of their income. That needs to include everything including mortgage or rent, insurance, utilities, and maintenance. For most people this is a challenge, and they often would go over 50% to get a house they really wanted. We would oblige them because we would not have to pay their bills and we made more money through larger commissions, but I always worried (and yes, prayed) for my clients. Most are still in their homes, thankfully. And many have moved up to better homes. But I am sure it has been a struggle for many. Housing is important, but it is equally important to minimize its cost.
I keep coming back to the fact that the state has no justification for charging so much for royalty oil. That is OUR oil. The worldwide market is not the way we should decide its price.
One of the reason's there is such a problem in the housing market is the fact that banks gave mortgages to people who had to apply more than 50% of their income to a house payment.
As far as oil is concerned, what is the break even point for Alaska crude. That is the price the State should sell it at to it's residents. But then how would the people afford the income tax the State would impose on them to make up for the loss revenues. Can only imagine what each person in this State would have to pay to support a government that spends billions a year.
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